Q1 2020 Earnings Call

[music].

Greetings and welcome to outlets technical console. Its first quarter 2020, <unk> earnings conference call. At this time, all participants are no listen only mode.

Question and answers that should will follow the formal presentation. If any what's your acquire operators. This is during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host David quit Executive Vice President. Thank you Mr. glad you baby and good afternoon. Thank you.

All for joining us for our first quarter 2020 conference call.

We trust that you've seen our first quarter earnings release issued after the market close today.

We've also posted a presentation to accompany this call which can be found on the investor section of our website at <unk> Atlas Dotcom.

Before we begin I would like to remind you that today's call may include forward looking statements.

Any statements, describing our beliefs goals plans strategies expectations projections forecasts.

Assumptions.

Forward looking statements.

Please note that the company's actual results may differ from those anticipated by such forward looking statements.

For a variety of reasons.

Many of which are beyond our control.

What do you see our recent filings with the Securities Exchange Commission.

Which identify the principal risks and uncertainties that could affect our business.

Aspects and future results.

We assume no obligation to update publicly for any forward looking statements.

In addition, we will be discussing all providing.

Certain non-GAAP financial measures today.

Including adjusted EBITDA and adjusted EBITDA margins.

Please see our release in filings for a reconciliation of these non-GAAP measures.

To their most directly comparable GAAP measure.

Moving to our agenda on slide three.

I have joined today by Atlas's, Chief Executive Officer, Joe Boyer, who will begin with a business overview in coated 19 update.

Our Chief Financial Officer Wall for Paul will then began an overview about financial.

And I will conclude with the discussion on our outlook before we open the call to your questions.

Now I will turn the call over the job beginning on slide four.

Joe. Please go ahead.

Thank you David I appreciate it and good afternoon to all the you join us on the call. We appreciate your time and and your interest in Atlas.

I'd first like to say the that our thoughts are with those that have been impacted by the krona 19 pandemic, yes, we're thankful to all the healthcare workers and first responders and others that the braving the front lines to help us get through this situation and I include the mini Atlas professionals, who are.

I really fulfilling their serban rose as a central workers.

As a provider of these mission critical services to many a central sectors I'm incredibly proud of how the Atlas team has has risen to the occasion to take care of each other and continuing to provide exceptional work.

Starting on slide four.

Well the U.S. economy has experience an unprecedented transformation since our last update you in March.

Business entered.

<unk> the cobot 19 pandemic at the strongest point and our company's history.

We produced a Q1 LTM revenue.

475 million and expanded our fully funded backlog the $607 million, which is a first quarter record for us.

We had another strong quarter of adjusted EBITDA performance.

Which was up 18.6%, which is in line with our expectations, while demonstrating the ongoing.

The underlying earnings power up or business.

We accomplished all of this was completed in our business combination with Boxwood merger Corporation, and becoming a public company in February.

And this marked at a really important milestone for our rapidly growing company.

Excluding the cost resulting from that transaction, we generated positive and higher first quarter net income compared to the prior year quarter.

Now the same time.

Due to this pandemic, we took the necessary actions to proactively manage cash and cost so not only mitigate the impact of the current pandemic.

But also situate ourselves better execute.

On our growth strategy as we emerge out of this period.

We provide some details on our cobot 19 business update and I'm I'm, referring to slide five.

Our entire team remains committed to our longer term objectives.

We've done an exceptional job navigating the initial economic shock of the cobot 19 crisis.

We are prioritizing safety operational efficiency and financial flexibility for the benefit of our collective successes.

In regards to white people.

Unfortunately, we had one employee the contracted the virus.

We moved quickly to accommodate that employee and to stop the spread of the virus to anyone else within our organization.

I'm pleased to confirm that this employee has fully recovered and its return back to work.

And as always we had been extremely proactive and on the front wave of ensuring the safe and responsible support to our employees.

Clients and the end the communities in which we serve.

With this virus, we are adapting that's policies and procedures to protect the health and wellbeing of our colleagues and others.

We have been in constant contact with our 100, plus branch offices employees and our customers.

All our offices remain open.

Although our employees have seamlessly shifted to a remote workforce, where that it's than is possible and we have instituted CDC guidelines.

Including daily temperature monitoring a social distancing protocols.

<unk> personal protective equipment, and we are staggering shifts to keep the organization deficient and moving forward.

A broad range of our mission critical professional technical services that we do provide our in support of many of the essential market sectors. So we are continuing service across our diverse client base and across our wide geographic footprint.

So that said.

Given the rapid decline in private sector work since the onset of the crisis, which included a double digit decline in April revenue.

Our teams have really moved quickly to reduce cost and cash deployment.

And this includes.

Study management salaries in past incentive compensation.

Workforce reductions.

Furloughing and even reducing some hours to some employees freezing hiring and really enforcing tight controls a non essential expenses.

While thing just as focused on continuing to pursue and add new work.

As you know, we're an asset light business and a significant portion of our cost structure is variable.

Which allows us to effectively align resources with the current level of work.

At the same time, we're mindful of the need to keep critical resources in place.

Execute growth as states endless apologies continues to gradually lift the shelter in place restrictions.

We are making a balanced cost decisions. That's the interest of our company for success today and then the longer term.

Now moving to us a market dynamics, which I'm, referring to slide six please.

Our services predominately relate to infrastructure regulatory driven our code mandated work.

With roughly half of the revenues in public or government based and non discretionary in nature.

So we're continuing to win projects all across our regions.

But most of our new work driven by repeat customers.

Now in the private sector, we have experienced a localized delays and the execution some of our contracted work.

We have a sizable focus and the transportation sector, where we have seen local and state agencies continuing.

And even ramping up their activities. Many of the states are taking advantage of the lower traffic volumes seen across the country.

Other public works project were performing are largely continuing a as normal during this time.

In addition, as I mentioned last quarter.

We have over 500 industrial hygienist professionals.

We're working closely with our new and our existing customers to provide critical guidance the dependent.

As it relates to keeping people safe.

We have provided decontamination plans and monitoring services on many sites throughout the country directly related to the virus.

Now from a geographic standpoint, our work has continued at near normal volumes in most of the country.

Oh, we have faced localized challenges and our private work.

Based on the severity of the stay at home motors in certain localities and states.

Which have had delayed many of our projects we're seen most of the declines occurring in the northeast.

Around the New York Tri State area in New England, as well as in Northern California.

And that's an important point here, we have not had any contract cancellations and that's node negative impacts to our backlog.

And we are seeing some very recent signs of markets reopening.

Speaking about our durable business model on slide seven.

Last quarter, we did speak at length about our business. So only reinforced the elements that provide context, the resiliency of and the broad range of our services and this demand environment.

Most of our work is regulatory and compliance driven.

That's it provides consist a need for our services.

Approximately 70% of our work is on existing structure and assets.

90% up revenue is from repeat customers, which provides a relatively stable platform for most of our business.

Geographically, where weighted towards high growth well funded read this in the U.S., such as Texas throughout the southeast and California.

Across our diverse end markets.

The approximately 50% of our business that is some way government base is still benefiting from favorable industry Tailwinds.

And those tailwinds include the continuing upward trend of municipalities and and state agencies.

Outsourcing project quality assurance and quality control services to the private sector.

Another tailwind is the perpetual need as I'd mentioned a lot of times.

The upgrade and maintain our nations aging infrastructure.

Combined with our increased ability to win larger projects and our ability to cross sell.

As evidenced by the growth of our multi year fully funded backlog.

We're very confident of the resiliency in our business.

Our company is rapidly scaled up in recent years through strategic accretive acquisitions.

We are better positioned today for economic cycles, given our leading national platform.

A broad range of services.

Deeper bench.

And our flexibility to relocate our services to where 9000 clients need is the most.

Well, our immediate capital allocation priority is cash preservation.

We are staying close to or talking to M&A targets.

Well, we can drive immediate accretion through our scale and our technical expertise.

In summary, we're continuing to monitor all aspects of our business very closely working with our managers health experts and safety professionals to ensure that are critical services are being performed responsibly and efficiently.

As we've done in the path.

We have led by taking decisive actions to adjust our business through economic realities.

Our focus is the same during this unprecedented situation.

We will come out of this pandemic stronger and we came in.

With an even higher performing business.

Before I turn the call over I mentioned that in next couple of days or we'll announce an update.

On our finance and accounting organization.

In line with our fast growth and the demands of our new public company status.

We are strengthened by realigning the significant roles within our finance and accounting team.

We will appoint David Quinn to serve as our Chief Financial Officer.

He served as our executive Vice President Corporate Affairs since 2019.

And that's building on the couple of decades of financial and operating experience.

Which does include a former CFO and other executive roles.

Multibillion dollar companies within this industry.

He's worked at the valued partner mine.

Walter Palace mourn many have over the years and has helped us build atlas and to what it is today.

And that's including leading us from our move from private to public company.

But continue to serve as a valued member of our executive team and we'll are paying his role as our chief accounting officer.

But there is over 25 years, a big port count experience.

Confident.

This will strengthen our organization.

I'll now turn the call over to Walter will discuss our financial results.

Thanks, Joe and I'm going to move on to slide eight.

Our first quarter performance demonstrates solid execution by our themes.

And they were inline with our expectations.

We operated under relatively normal conditions for most of the quarter with the effects of the pandemic impacting only the second half of March.

Gross revenue for the quarter increased 3.5% 209 million.

We had organic revenue growth of 1.4% driven by increased scope of services and expansions into new markets.

And as I've just mentioned our growth was impacted by the pandemic in the second half of March.

Net revenues of 90.5 million grew faster and gross revenues in the quarter, increasing 5.5% year over year.

Net revenues as a percentage of gross increased to 82.8%.

We were able to self perform more services during the quarter.

Our acquisition of long engineering contributed over half of the revenue growth.

And also brought us additional opportunities to bring services in house.

Adjusted EBITDA increased 18.6 person.

12.9 million year over year.

You were able to build off of the good topline momentum.

Combined with strong workforce operating efficiently.

As well as synergies from our merger with APC a year ago.

As a percentage of net revenue adjusted EBITDA was 14.2% up 160 basis points year over year.

Our first quarter net loss was 23.6 million did include 25 million of costs related to our business combination.

And the public company formation transaction.

Our backlog remained firm at 607 million at quarter end.

There's some seasonal elements to backlog so we look at it on a year over year basis.

Which increased 6% compared to 575 million.

In the prior year quarter.

Yeah, Good project wins across the platform and we're seeing an increase in average project size.

So let me turn to slide nine.

Like about liquidity and capital resources.

When you look at the first quarter, we had an outflow of cash from operations were approximately 12.6 million.

We had 14.7 million a onetime cash expenses incurred.

The complete the transaction and merger with boxwood.

Excluding onetime cash expenses, our cash flow from operations would have been positive $2.8 million for the quarter.

Which is an improvement of approximately 600000.

From the prior year quarter.

You keep in mind, the first quarter. If you don't really low it's a low point for cash slogan given that it's our smallest revenue quarter.

We already discussed.

Our spending in cash preservation measures.

So I'll talk about liquidity enhancement in recent financing activities.

We ended the quarter total liquidity of 37 million.

Including cash of 19 million plus what was available under our revolving credit facility.

After the quarter close we did draw down on the remainder of the credit facility out of an abundance of caution.

Following the draw we had cash on hand of approximately 37 million.

Which gives us ample liquidity to manage our business.

At quarter end, we had total debt outstanding of 302 million.

Shifting of the 281 million dollar term loan and borrowings under our revolving credit facility.

We entered into the term loan as part of the merger with boxwood.

And in February following the close of the transaction as scheduled we work with our lenders to syndicate our debt.

But with a rapid deteriorating credit markets with a pandemic.

There were no new debt issuance issuances going on so we weren't able to complete the process and the lenders exercise their flex options on March 30 Onest.

Well continue to monitor the debt capital markets for future potential opportunities, but in the interim.

Our existing credit agreement continues to provide us with the long term maturity window.

Beyond nominal amortization payments.

We have no other maturities until our 40 million dollar revolver is due in 2025.

And the balance of our term loan is due in 2026.

It gives us and represents a weighted average maturity schedule of about five years.

Our financial Covenant is based on net debt to trailing 12 month, adjusted EBITDA, including acquisitions.

On that basis, we ended the quarter at 3.2 times.

We're comfortably within our covenant threshold, which calls for net leverage to be below 5.5 times.

We continue to expect to generate positive free cash flow for the full year and expect to be within the financial covenant.

Which does step down.

The five times.

At December 31st 2020, and at that point it remains at that level for the remainder of the term.

With that I'll turn the call the David to provide some forward looking color on slide 10.

Thank you very much water.

Well today, we have provided some insight into the fact is that not only highlight the long term potential of our business.

But also the resiliency and flexibility of our business to win in all environments.

We're proud of our teams and what they've been doing in their ability to quickly adjust to this new economic reality and continue winning work.

At the time of all last call, we had not yet experience a material impact from co. They had 19.

Which was an unforeseen macro factor beyond our control.

[noise] since that time, the impact to our business from called at 19.

The next with delays in the execution of some contracted work a commercial industrial clients primarily.

In the northeast and Northern California.

As Joe mentioned, partially offset by.

Some near term accelerations of activity with our state T O T type work.

You have in this rapidly changing environment and the diverse impact of cold they'd 19 occurring across the country. We are currently suspending our 2020 earnings guidance.

As we monitor what is really a fluid and often inconsistent shelter in place.

Order environment.

Along with the longer term state Deo, T. and municipal funding levels outlook.

We anticipate the bottom to the business trough being in the second quarter of 2020, but do see remain pressure.

Over the course of the balance of the mainly reflecting the volatility in our private sector work.

From a near term positioning perspective, we have quickly moved to scale, our cost structure, where we expect to realize savings on the order of $8 million to $10 million.

From overhead reduction.

For the balance of 2020.

Our cost structure remains highly flexible as we said and that's we're able to scale, both up and down fairly rapidly.

In response to temporary chefs and business demand.

Therefore, we do expect to manage our business with appropriate levels of liquidity and positive cash flow generation.

While maintaining conformance with all.

Banking covenants.

As we look ahead.

We do see some encouraging catalysts, we ended the quarter with a fully funded backlog of 607 million.

And again today no contracts in backlog has been canceled.

And we continue to pursue Unsecure, many new project wins.

Also important to note as we have seen.

A market improvement in our labor utilization relates over the past few weeks, which is encouraging.

And we attribute that to non discretionary and transportation related projects.

Tingling.

In addition, some states have also begun economic restrictions and many others have initiated the decision making process to ease that stay at home orders.

So with all of this we remain confident that the underlying earnings power of this company remains unchanged.

From our initial public offering and expect to continue our strategy of growing the business.

Both organically and through de leveraging acquisitions.

That expand our technical service offerings and geographic footprint.

Especially those likely to benefit from increased government infrastructure spending.

Moving to our summary, slide number 11.

Yeah, we.

We encountered the Colgate Nike epidemic and dynamic at the strongest point.

Our company's history, and with a record first quarter backlog.

And a continuation of a strong margin performance.

Our first quarter results demonstrate.

The continued forward momentum of the business and that our strategy of going through accretive acquisitions.

It's driving returns.

Near term.

We will continue to focus on keep an eye people say.

Optimizing our efficiency and liquidity.

While maintaining a developing key client relationships as we look to substantially benefit from the upcoming government infrastructure stimulus spending as we move into 2021.

Thank you all again for joining us. This afternoon, operator, we would now like to open the lines for QNX.

Thank you if he would like to ask a question. Please press star one on your telephone keypad confirmation tell my indicate your line is in the question. Kim you made prestart too if he would like to remove your question friendly Q and for participants using speaker equipment. It may be necessary to have you had said before pressing the star.

He's.

Our first question is from Rob Brown with Lake Street Capital Management.

[noise] definite [laughter].

So I didn't write off.

And I think as mentioned briefly you had double digit declines in April like where are you referring to the commercial markets in particular or or business overall.

[laughter].

Rob that a that was reference to our business overall and and those double digit declines are limited to the high teens and that there was mainly as we mentioned in the presentation, mainly in our commercial business and as we did not have not seen much impact that are true.

As per patient business at all.

And mainly around the areas that it really had the significant shelter in place programs, which were a New York City, Northern California for Us and Michigan as well.

Okay, and then did you say that you saw some some loosening of that so far in May I know through yet but.

That's what we have in fact.

Yes.

We did see and have seen three consecutive weeks of utilization improvement and a in particularly in the last two weeks some.

The increase in northern California on our direct billable hours as well so and that's just as the opening up of the Northern California shelter in place program has just begun to loosen up so besides there.

Okay, great. Thank you my thinking how much your business is transportation and I guess, where you where you see that started to stabilizers you see benefits there what areas do you see benefits within the transportation sector.

So we have I've always liked the transportation businesses that Oh, one of the out of the strong industries that and markets that were in that outsource construction engineering inspection as well as construction quality assurance services. So it's a strong market for us not to mention just.

The need for the nation's infrastructure spend it is a it's a great market to be and just due to the you know the years of deferred maintenance and the need for upgraded our infrastructure. So so roughly transportation's about 45% to buy business and I'm actually looking to grow that business going.

Forward, which should Oh really play well as as we look for a long term infrastructure stimulus and so coming our way.

Okay, great and.

And then and then maybe just turning the acquisition environment I know you're focused on cash at the moment, but longer term your acquisition strategy a pure is still in place, but what's the market look like are there things.

Developing differently now in this environment or or things are still active or then holder, where it we're sort of acquisition activity yeah.

[noise], that's a really good question, Rob we have had a a really nice an active acquisition pipeline for quite a while the she is you're aware and I talked about last quarter given the environment that we're in we felt it was prudent on.

The business was shaking out we're still doing that now and that's one of the reason that for pulling back our our our guidance going forward, but we're in close contact with a number of are really great candidates that we have lined up and completely plan on moving forward that that once we see a little bit more of a stable.

Environment and as we mentioned of course cash is king and will continue to really favor our cash position, but I would have some nice candidates as particularly in the areas that.

That I just told you about in areas that we're looking to grow.

Okay, great. Thank <unk>.

Our next question is from Kathryn Thompson with Thompson Research Group. Please proceed.

Hi, Thank you for taking my questions today, that's just a follow up on your capital structure. You appreciate you, calling cadence prepared commentary but.

Could you help us understand just where you stand in terms of here.

Hi, maintenance capex needs pretty year any change we should think about other put two takes in terms of cash taxes and interest expense.

Okay.

<unk> Yeah. Catherine this is all propel so really from a maintenance Capex perspective, the you know we're still in the.

I'd say, we're in the range of 1.5% of this revenues.

Sure.

Maintenance Capex.

In terms of cash taxes for the year.

Not really looking at a whole lot because we did you have the benefit of the step up in tax basis at the C Corp level.

Yes, we got some expenses that hit the year related to the transaction.

Yes.

[noise] limit our taxable income for the year, but if we end up with some it would end up being shielded by the.

Tax.

[noise] asset we have sitting at the C Corp level.

Okay and any any other thoughts on just kind of your basic working capital needs.

Any any other thing evident that Ah lisanti obvious that's generating.

Yes that would impact your your cash position for the remainder thier.

No I mean this was you know first quarter results are really go a little bit seasonal driving driven so yeah. Typically we have a working capital need in the first half of it normally here in the back half a year, we do have a cash flow from operations are picking up significantly so.

Oh really good time for us to be picking back up with some of the state's opening back up.

Okay perfect last quarter.

On your earnings call.

Sure.

First talk a little bit about industrial hygienists demand I'm, obviously, not a lot has happened since then could you paint a picture for those call again without the increase in demand how Atlas has responded and give a color.

The types of services that you're providing now that perhaps forgot and as greater demand six Tonight I see gap.

Thanks, Cathy that's it that's a really good question and let me see if I can I can point that out as I talked about last quarter, but we were seen at the time. This is.

An increase need and really evaluate exposure pathway and existing businesses, we saw quite a bit of activity around developing decontamination plans and then overseeing our monitoring those decontamination plans.

To be honest with you as as the shelter in place programs went into place a lot of that work seem to be put on hold is either being in done by another party or or appliance held up on those services.

Currently we.

Continued in the first quarter, providing a lot of training and consulting services around the things such as you know respiratory fits testing. We have then developing operational plans for existing businesses. So how to operate your business post approval.

On a virus so operating plans are a and we're starting to see more of that request just as these shelter in place programs are picking up.

So so that's been or an area that we see continued growth in going forward, a very a attractive new area that that is come up is it's really been on the west coast where the.

Cities Mr. Powell these are starting to require really independent third party.

So really evaluate a cold bid construction plan on existing sites. So so monitoring social distancing then how crews worked together that is right up our alley and and within our strengths says we're on the sites for third party reasons as well so we see that as in the area going forward that I think well over.

Open up for our business.

You know ends in some some general sense, I think our clients and the and dealing with it was contact tracing.

You know additional turnaround cleaning says there's businesses might change shifted starch and oversight of those kinda plans I think will be a growth area for us going forward. So in summary, we.

We do about a $45 million a year annually industrial hygiene services I mentioned, I think last quarter and roughly about 10 million of that is really in what I call. So the high end industrial hygiene services services that are really a <unk> you know driven by our Cie ages and infectious disease control and such.

So we do see a growth in that post sheltered placed program going forward. It has been you know relatively intercept insignificant in revenue dollars in first quarter, but we do see that a growth going forward in those areas that I mentioned.

So I hope that helps on hey, yeah that that that help and even though it's on a very small level in Q1.

Is there way that you can.

Helped us quantify on a year to year basis gross.

Ah whenever its greater momentum building. So another branch really back half of March and April understanding it's not a perfect straight line you can't take what happened in April and and pay for it but even generally are you seeing double digit type growth in that segment.

No I would I'd have to be honest to say no we're not seen.

Double digit growth in in that segment.

Coming out of Q1 as of yet though.

Okay.

That's an area that based on.

Our initial conversations and request.

It.

<unk> and greater contributor us organic breads, calling for what you had a fair statement absolute that that is it fair statement that's true.

Just 10000 rentable visit.

Yeah. Catherine this is David Quinn, It's you know this isn't it ongoing assessment for us and one of the one of the things that we're working through is there. They're currently is a lack of consistent regulation on how.

The contamination side of things for covert 19 are addressed.

You know its new and the policy is lagging the broader policy is lagging, but it's going to catch up.

It's taken a little better time for now our team.

Really has been actively engaged in responding to not only the new bid opportunities and ongoing work.

But they are busy here and as the S IP orders.

Opening up and begin to unwind and hopefully CRISPR.

No regulatory guidance comes out on how this stuff is supposed to be treated.

That's when we think we're going to see sort of the next material bump with this team.

Okay. That's very helpful somewhat tied into that speaking and government is our infrastructure Ah you touched on that so you do have some expertise and working with government agencies and monitoring and echoing what she said we've seen an acceleration.

Infrastructure projects, particularly in Texas, Virginia underway.

Florida and Georgia.

Could you remind us they talked about transportation as precision business, but really.

Percentage tied to infrastructure, particularly that existing aptito breaking out between existing assets and new construction.

And then also.

Could you confirm that you're not seeing any projects backlog or canceled.

Or just any other additional color you can get just on infrastructure. So that would include not only breadstick water and and other the buckets that you can't accept the structure.

Okay, let's take care of that Catharine its a lot of sometimes some price that <unk>, let me say that <unk> that I think I.

Misspoke when I spoke earlier about the size of our transportation business I think it's it's actually were up to about 30% to 30% of our business not the 45 that I reported as a whole.

Yeah, I did mentioned earlier that that when we consider infrastructure, which is the majority of our business we talk about.

70% of our work is done on existing assets. So that is a existing buildings structures remodels to existing structures.

You might why didn't the burrowed that that type of stuff. So 70% of our work is on existing structures.

Tried to get to to your other question, we don't do a tremendous amount of water work. So our infrastructure work is really around transportation retail petroleum commercial industrial type facilities, we do not do refer.

Wineries a inside similar retail petroleum is a big part of our business.

I forgot to point I was going to say to.

Well our services projects capsules.

That's what I was going to say sorry, thanks for reminding me, that's where I was glad that we have not and I will I will say, we've got projects that have slipped to the right not canceled we had a large deal we project that was underway and beginning to get it away. There is now pushed to October and the beginning of 2020.

One so it slid to the right so, but we haven't had a cancellation project.

Today.

Okay perfect. Thank you very much.

Thank you Kathy I appreciate it.

Our next question is from Charles you with Macquarie. Please proceed.

Hi, Good evening guys. My questions on business next can you talk about the different marching in pricing dynamics for the private commercial end markets as it relates to Tiananmen cost plus contracts and then maybe relative to the transportation then overall in friend markets, how should we think about margin for.

The overall business as the commercial mix winds down.

Sure let me so trials in in general sense, our gross margins from our commercial and transportation business aren't significant other the roughly the same across our business and as we've communicated in the past.

About 90% of our overall work is kinda materials and cost plus obviously, the cost plus work being more around the state deities and ER and state agencies and such.

So therefore, we don't we don't we have not seen as the work changes up and down we haven't seen a relative change in our gross margin mix in our business overall, so our transportation work has been a little up in our private sector down, but the margins I've really been consistent across the businesses. So the most part.

Hi, guys are part of that.

Yeah, I didn't know if I missed the back end of your question or not a perfect set up Charles.

No no you guys answer it so it really helpful. Thanks, guys toxin.

Thanks again, how appreciate it.

Having said that question answer session I would like to turn the conference back over to jail player for closing remarks.

Thank you very much matter I appreciate it so listen I want to thank everyone for joining US today, we do appreciate your support of Atlas and and look forward to updating you on the progress.

At the beginning next quarter. So thank you very much and have a great evening.

Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

[noise].